Energy Crunch for Britain’s Poor

A poster of Britain’s chancellor of the Exchequer, George Osborne, burning at a protest in London this month against rising energy prices.CreditCreditAndrew Winning/Reuters

By Beth Gardiner

Nov. 11, 2013

LONDON — Avagay Mowatt knows that there will be times this winter, just as there were last year, when she will have to choose between giving her children a hot meal and bath and keeping their home warm.

With Britain’s biggest utility companies announcing price increases of as much as 10 percent in recent weeks, Ms. Mowatt is certain to struggle, again, to keep enough credit on her meter — which she has to feed before she can turn on the gas supply. When she can afford it, she goes to a nearby shop to put 15 pounds, or $24, on a card that she inserts in the meter; but in the cold months that money never lasts long.

“Sometimes what I do is, I don’t turn the heating on in order for me to be able to cook, and bathe the kids,” she said. She and the children, aged 7 and 5, huddle under blankets in her bedroom on chilly days, she said: “We shut the door and block up the bottom so we keep the heat in.”

How will Ms. Mowatt, a single mother living on public assistance in Brent, northwest London, manage this winter? “I have no idea,” she says. “I try not to think about it.”

Many Britons share such fears. With wages stagnant after years of economic woes and government austerity, about 2.4 million households suffer fuel poverty, the government estimates.

David Rose, a spokesman at Energy Solutions North West London, a local advice agency helping Ms. Mowatt, said demand for assistance was running twice as high as last year.

“People are desperately worried,” said Mervyn Kohler, a spokesman for Age UK, which aids the elderly. “They have been turning down their thermostats, living in one room, wearing overcoats even when they’re in their own homes, going to bed early. ”

The recent natural gas and electricity rate hikes have touched off a political furor, prompting angry exchanges between Prime Minister David Cameron and the leader of the opposition Labour Party, Ed Miliband.

For weeks, the argument has dominated headlines, with Mr. Miliband blaming the jump on energy firms’ hunger for profits and Mr. Cameron blaming excessive environmental levies for driving up bills that have nearly doubled in real terms since 2005.

Mr. Cameron has slammed his opponent as “a con man,” and Mr. Miliband has accused the prime minister of serving as “the unofficial spokesman for the energy companies.” The debate is likely to sit squarely at the center of the coming campaign for parliamentary elections, due in 2015.

The energy issues that Britain faces are complex, and central to sometimes competing concerns about sagging living standards, a warming climate, a pressing need for investment in aging power infrastructure and fears of possible blackouts.

About 60 percent of the price increases have been driven by rises in the wholesale cost of energy, the Department of Energy and Climate Change estimates. Natural gas remains expensive in Europe, unlike in the United States, where a boom in fuel from shale has pushed prices down.

“What’s remarkable about all this discussion is the absence of facts,” said Dieter Helm, an energy policy professor at Oxford University. “None of them have got long-term energy policies sorted out, and none of them have got their climate change policies sorted out.”

The latest round of debate began in September, when Mr. Miliband announced that, if elected, Labour would impose a 20-month freeze on utility prices, using the time to improve energy market regulation.

Tabloid newspapers revived their old nickname for him, “Red Ed,” and Mr. Cameron accused him of wanting “to live in a Marxist universe.” But even Mr. Cameron acknowledged that the proposal had struck a chord among struggling Britons. It has proved popular, bolstering Labour’s poll numbers and putting the prime minister on the defensive.

Mr. Cameron, who once promised to lead “the greenest government ever,” now blames the cost of renewable energy for Britons’ high bills and is promising to review the “green levies” that help fund investment in clean power. He has also called for an examination of whether the market, dominated by six big companies, could be made more competitive.

That represents a sharp policy turn away from his earlier use of environmentalism to rebrand his Conservative Party as progressive after three straight election defeats.

The stance of the party, which backed passage of the climate change law, “has changed out of all recognition. There’s been a huge shift,” said Paul Ekins, professor of energy and environment policy at University College London.

The debate also has exposed a deep rift in Mr. Cameron’s uneasy governing coalition with the Liberal Democrats, the junior partner whose leaders pledge to defend renewable-energy commitments.

“There’s an enormous division in the government,” Mr. Ekins said. “That’s the reason we’re getting such confused and confusing messages.”

Levies funding renewable energy account for about 4 percent of home energy bills but are expected to rise. Funding for energy-efficiency upgrades adds another 5 percent.

With pressures coming from many directions, Britain is at an energy crunch point. Many coal plants are likely to close rather than comply with European Union air quality rules, and almost all its current nuclear reactors, which generate about 18 percent of its electricity, are nearing the end of their lives.

The 2008 Climate Change Act requires steep cuts in planet-warming carbon emissions and with plant closures underway, the energy regulator Ofgem warned in June of a rising risk of blackouts as soon as 2015.

The bill for building a new generation of clean power plants and expanding transmission networks could exceed £100 billion — although some of that would have to be spent even without the carbon targets because much existing infrastructure needs modernization.

“It’s a perfect storm,” said Malcolm Keay, a senior research fellow at the Oxford Institute for Energy Studies. “You’ve got all these issues, and at the same time you’ve got an economy where wages have been going down for the last couple of years.”

Adding to consumers’ woes, Britain has piled many of its energy priorities onto utility bills. Customers are paying to fund renewable power and energy efficiency investments, transmission grid maintenance and efforts to help the fuel-poor, said Angela Knight, chief executive of Energy UK, the industry association.

Altogether, such extras add nearly 30 percent to household bills, she said, arguing that other ways should be found to pay for some of those expenditures — such as general taxation. The industry backs Mr. Cameron’s proposed review of green levies and wants a reassessment of plans for reaching renewable power goals, she said.

Instead of attacking the energy sector, Ms. Knight argued, politicians should acknowledge that their own decisions, particularly on carbon-cutting, have helped drive bills up. She pinned the rest of the rise on the wholesale gas price.

“There’s major investment that needs to be done, there’s a major program that needs to get underway,” she said. “The companies that need to do it are constantly criticized and accused.”

Environmentalists say that the current debate risks exaggerating the impact of green levies, which they say are really quite low. They acknowledge that costs will rise but say that reducing Britain’s exposure to volatile fossil fuel prices will ultimately save consumers money, as more energy is harvested from “free” sources like sun and wind.

In the meantime, said Nick Molho, head of energy at the conservation group WWF, the cost can be more than offset with increasing efficiency.

“The short-term, knee-jerk political reaction to renewing the U.K.’s commitment to green policies is really counterproductive, because we know that renewable technologies have a really good story to tell in terms of cost reduction,” he said.

The government’s climate advisory body estimated in June that low-carbon energy could save Britain between £25 billion and £45 billion, he noted.

The mix of issues also includes the emotional debate over nuclear power.

While Germany is moving away from nuclear following the 2011 Fukushima disaster in Japan, Mr. Cameron’s government just signed a deal with the French giant EDF and its Chinese partners to build Britain’s first new nuclear reactor in a generation.

Critics have focused on the government’s guarantee of an electricity price twice the current rate. Mr. Keay, of Oxford, however, said such deals were probably necessary for Britain to meet its carbon reduction goals.

For those like Ms. Avagay, the single mother, concerns are more immediate. Her adviser from Energy Solutions, the local aid group, has told her to put aside spare coins for the coming winter’s bills.

“She says, if I have a jar, what I must do is, if I’ve got a spare pound, I must drop it in there,” Ms. Avagay said.

Instead, Ms. Avagay has been paying the money straight onto her account. Even so, just before temperatures dipped this month, the gas meter outside her neat brick house showed only £2.92 in credit. In the narrow hallway indoors, the electricity meter had a bit more: £5.53.